Hi team, After making a house purchase happen mid last year, I am looking to decide on the next 5 year plan. I don't really like our financial situation - it's not terrible but it's not great either. Financials Overview: PPOR - $800,000; Loan: $712000 IP1 - $800,000; Loan: $582000 Total Property Assets: $1.6m, Loans: $1.29m All properties are houses in Brisbane. Cash/offset: $20k Business Investment: ~$80k Business Income: ~8k per annum Rent income: ~$4k pa. after all expenses this year. Older property that required lots of maintenance in the last 12 months, might be a lot better next year. Salary: ~$160k pa + super (wife is currently not working and is hoping to work part time in the future) Car loan: $20k at 1.9%pa - needed a car and had no free cash to buy one at the time. Current Scenario and Short Term Objective We're in our mid to late 30's, have 2 children in part time daycare with few years until school. IO loan is IO The house we are in right now can use a bit of sprucing up - it's the cheapest property on the street where most houses are closer to $1m. Schooling is a major consideration, currently we're in the catchment and walking distance to a good public primary and a great private secondary school It would be great to have the option to purchase another property, in case the family grows. Medium to Longer Term Objective By the time we reach say 50ish, we would like to: Be settled in our PPOR Have a decent source of passive income Have the flexibility to perhaps wind back work, think about a career change or whatever else it may be be able to send our kids to private school should we wish to do so want to do the above without jeopardising our retirement and our children's inheritance Next steps - ? Pay off car loan? Thanks in advance PS: Thanks D&J for the format of the post, I stole it as it was so easy to read!
PPOR (P&I) 1: 570k 2.24% fixed till 11/2022 2: 142k 2.04% fixed till 01/2022 IP: (IO) 1: 582k 2.49% fixed for 2 years (I'd have to check when this one expires).
I like more buffer than what you have for a rainy day. so me I would pay down some debt. Wife in Pty time work and all all her income used to pay of unproductive debts once don’t PPOR loan. although another method Is go aggressive tidy up properties through sweat equity , revaluation and draw on equity for next investment. go again can ip have a GF?
Your car loan is cheap, however still a good ideal to pay of this bad debt first. Your rates are also good, and fixed so nothing you can really do there. Im more curious why you borrowed 90% against your PPOR, and assuming you paid LMI when you have plenty of equity on your IP, Or are the properties cross collaterised ?
If I was you I would just put my head down and start paying off that PPOR loan over the next few years. If your IP has good locality and demand you should see some good growth in the short term. You can then re-evaluate where you are after the market moves in the next couple of years. Unfortunately, a good plan is usually quite boring and simply requires a forward-thinking approach and dedication to achieve. I hope this helps.
Hey, so I thought I'd give a little update on this post. We were very lucky to catch the Brisbane property wave, very thankfull for that. Still not exactly sure what that 5 year plan is Financials Overview: PPOR - $950,000; Loan: $700000 IP1 - $1,150,000; Loan: $582000 Total Property Assets: $2.1m, Loans: $1.28m All properties are houses in Brisbane. Cash/offset: $20k Business Investment: ~$80k Business Income: ~8k per annum Rent income: ~$6-8k pa. after all expenses this year. A bit better then last year, seems to be trending up with rent rises. Salary: ~$163k pa + super (wife is still working out what to do, negotiating a part time position with her old employer) Car loan: Gone, downgraded to cheap runabout and cleared the loan The loans on the property are fixed term with 1 year remaining, but with the recent interest rate changes the break costs seem to be zero (I've checked with one bank but not the others). My thinking is, might be a good time to consolidate the loans with one bank and lock in a low interest rate for 2-3 years? Cheers
Careful what you do there - you might end up cross-colling and also doing some weird thing that affects tax deductibility etc. The Y-man
Yep, all things to consider. I was thinking keeping the loans completely separate, but consolidate to a single bank (currently its between two banks) to hopefully get a better deal and maybe lock in good rates.
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